China SAMR Initiates 2019 E-Commerce Inspection and Rectification Campaign

In a move to implement the relevant provisions of the E-commerce Law, crack down on illegal activities and standardize the online market, China State Administration for Market Regulation (SAMR) along with other 7 ministries jointly issued a notice ^[1] on June 20 to launch a special inspection campaign, mainly targeting illegal activities in the consumer goods sector with the aim of eliminating health and safety risks, anti-competitive behavior and illegal data collection.

The campaign will run from June until November of 2019 and will prioritize 7 key tasks:

1. Standardize the qualification of e-commerce entities. Regulatory departments will investigate and punish the violations of information disclosure obligations as specified in Article 15 of the E-commerce Law. It is also required to supervise whether the e-commerce operators have processed the formalities of market entity registration according to the Law, and whether the e-commerce platform operators have verified and registered the real information of the operators entering the platform.

2. Severely crack down on the sales of counterfeit and substandard products online, focusing primarily on food (including health food), medicines and other consumer products that pose health and safety risks.

3. Severely crack down on unfair competition behaviors and urge the e-commerce platform operators to establish a sound credit evaluation system.

4. Rectify internet advertising, focusing primarily on illegal and false advertising of medical treatment, medicine, health food and others that relate to public health and safety.

5. Crack down on other types of online transaction violations. Strengthen the control on “Daigou” (overseas purchasing agents) and increase efforts to rectify the operation of imports and exports of cross-border e-commerce.

6. Strengthen online transaction information monitoring and product quality spot check.

7. Supervise the implementation of e-commerce operators’ responsibilities.

• Specifically, the e-commerce operators shall fulfill their obligations in terms of consumer rights, intellectual property, personal information protection, etc., bear responsibility for product and service quality, and implement the “Repair, Replace, Return” responsibilities of online-traded goods.

• The e-commerce platform operators are required to strengthen qualification review and information disclosure for enterprise operating on their platform, and fulfill their obligations of protecting intellectual property, labeling pay-per-click products/services as advertising and etc.